Here they go again!
AND THE PRICE OF GOLD RESPONDS TO HIS COMMENTS.
Richmond Federal Reserve President Jeffery Lacker (who by the way is NOT a voting member), said this morning that there is a strong case for raising interest rates, indicating that borrowing costs might need to rise SIGNIFICANTLY to keep inflation under control.
Lacker, trying to get some support from other members said, “preemptive increases in the federal funds are likely to play a critical role in maintaining the stability of inflation.”
I kind of remember just a few weeks ago Chairwomen Janet Yellen said we are still on data watch, meaning the Fed will raise rates when the data supports such increase. Did anything change overnight? NO!
So what happens? As soon as his comments hit the news wires the price of gold dropped $20 dollars to a low of $1291.70 in the December contract. Now gold has broken through its support levels, so I expect it will be an uphill climb to get us over the $1,300 dollar mark again and I’m afraid his comments will put a strong sell bias in the market for now.
I’ve said this in the past and it bears repeating. The Fed Presidents should NOT be allowed to give their opinions between Fed meetings, especially the ones who are NOT voting members. These comments mean nothing and cause unnecessary disruptions to the markets. The Chairwoman should impose a gag order and let the minutes of every FED meeting speak for themselves.
It’s time to end this madness.
Have a wonderful Tuesday.
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